Treating customers fairly still tops agenda


Commercial lines operators should ignore the drive towards Treating Customers Fairly at their folly,...

Commercial lines operators should ignore the drive towards Treating Customers Fairly at their folly, as the regulator will apply the principles across the whole of financial services and not just the retail sector.

At a workshop on regulation of online trading, Tony Rawlins, senior consultant at CCL partnership, warned that while targeted at the retail side of the industry, the Financial Services Authority and potential business partners will start to assess companies' overall adherence to the principles, whether they focus purely on retail business or not.

"Some people in the industry have said that because they work in commercial lines they won't get involved in TCF, but in reality they will still get embroiled in it," he said. "No firm can afford not to apply the principles across the board."

Mr Rawlins went on to outline the impact of the recently published Turner Review on the insurance industry. He advised the industry to refer to Lord Turner's assessment of the failures of the financial sector to understand how the regulator is likely to become more hands-on in its dealings with the sector.

Mr Rawlins said future regulation as laid out by the FSA's new chairman Lord Turner will dispense with a principles-based approach across insurance and pensions as well as banking in the future. "The FSA's light touch, principles-based approach is out the window," he said.

Lord Turner's discussion paper was published a fortnight ago and assessed the events leading to the current financial crisis and recommended reforms. It outlined three underlying causes of the crisis: macro-economic imbalances; financial innovation of little social value; and important deficiencies in key bank capital and liquidity regulations.

Mr Rawlins said the insurance industry should be aware that the FSA is due to produce a follow-up consultative paper in September on whether regulated products need to be authorised, adding its assessment of any new products will be delayed until them.

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